What Does Inflation Mean for Me and My Credit Union?

This world certainly keeps us on our toes! After several years of pandemic-related disruptions that have led to an unpredictable economy, we’re now facing inflation at a 40-year high. That can sound pretty intimidating. So what does that mean for us?

The most direct impact of inflation is that things are going to cost more. You’re no doubt already feeling the price changes at the gas pump and grocery store. These increases are having a painful impact on all our daily lives. However, the impacts go further than just prices.

To slow inflation down, the Federal Reserve has been increasing interest rates. Just a few days ago, they applied the biggest interest rate move in 28 years and it doesn’t seem like they’re done yet. This means that loan rates are much higher than they used to be. The average mortgage loan rate has literally doubled since the beginning of the year. There have also been significant increases in the rates on credit cards, auto loans and other consumer debt.   

Unfortunately for the savers reading this, deposit rates will likely not keep up with loan rates in the short term. This is because there is an abundance of money in the market right now, much of which came from the trillions of dollars of stimulus money from the last few years. Therefore, financial institutions aren’t necessarily seeking more deposits and will be slow to pay more for them. It may take some time, but I believe deposit rates will eventually move too as the economy balances out.

As for the health of our credit union, we’re fortunate to be in a very sound financial position. The primary measurement of financial soundness for credit unions is their Net Worth Ratio, which must be above 7.0% to be considered “Well Capitalized”. We currently stand at 9.1%. Therefore, we’re well-prepared to weather the stormy seas ahead of us.

At times like this, I’m especially grateful to work for a community-focused not-for-profit organization like Rogue. We’re fortunate to be able to focus on helping our members and communities on their journeys toward financial wellbeing. Our ability to provide a little stability in unpredictable times like this has always been more valuable and rewarding to us than simply focusing on profits. Our focus is always on you, our member-owners. I hope you’ll reach out if we can help you on your personal journey in any way.